Apple’s iPhone exports from India double to $2.5 billion

Foxconn started manufacturing the iPhone 14 in India a few months ago – ahead of schedule – after a surprisingly smooth production rollout that reduced the lag between Chinese and Indian production from months to weeks.

Apple Inc. exported more than $2.5 billion worth of iPhones from India from April to December, nearly double the previous fiscal year’s total, showing how the American tech giant is accelerating its transition from China as geopolitical tensions rise.

Foxconn Technology Group and Wistron Corp. each shipped more than $1 billion worth of Apple’s flagship devices overseas in the first nine months of the fiscal year ending March 2023, people familiar with the matter said. Pegatron Corp., another major contract maker for Apple, is on track to move about $500 million worth of gadgets overseas by the end of January, the people said, asking not to be identified. revealing private information.

Apple’s rapidly growing export figures illustrate how it is stepping up operations outside of China, where chaos at Foxconn’s main factory in Zhengzhou has exposed vulnerabilities in the company’s supply chain. based in Cupertino and forced it to reduce its production estimates. That compounded a wider problem with evaporating demand for electronics as consumers weigh the risks of a global recession.

Apple, the world’s most valuable company, only started assembling its latest iPhone models in India last year, a significant break from its practice of reserving much of it for giant Chinese factories run by its main Taiwanese assemblers, including Foxconn.

While India accounts for only a fraction of iPhone production, rising exports bode well for Prime Minister Narendra Modi’s plan to make the country an alternative to China as a factory for the world.

China’s Covid Zero policy and an episode of violence at the Zhengzhou factory – dubbed iPhone City as the world’s biggest production hub for the device – have laid bare the dangers of being country-dependent. While Beijing has since abandoned that approach to containing the virus, Apple and other global names are exploring alternative locations more than ever.

India’s vast workforce, Modi’s backing and a thriving local market make it a prime candidate to take on more electronics manufacturing. Foxconn, Apple’s largest supplier, began building facilities in the country more than five years ago in anticipation of a need to expand its geographic reach.

A recent selling point is a series of new government incentives, a cornerstone of Modi’s drive to turn India into an electronics manufacturing hub. Foxconn earned $44 million in profits in the first year of the so-called production-linked incentive program, while Wistron’s claims are currently being processed, the people said.

Representatives for Apple, Foxconn and Wistron did not respond to emails seeking comment. A Pegatron spokesperson declined to comment.

What Bloomberg Intelligence says

India’s cost savings and market potential are among the advantages it offers to Apple’s iPhone supply chain. Its abundant labor supply and low wages – at least 50% lower than China’s – may strongly attract EMS players such as Hon Hai and Pegatron, given their low margins and labor intensity. -work. India’s Production Linked Incentives (PLI) provide subsidies equivalent to four to six percent of production costs for five years once certain performance criteria are met.

– Steven Tseng, analyst

Apple’s contractors currently manufacture iPhones in factories in southern India. But production in the country is just beginning. About three million devices were made in India in 2021, compared to 230 million in China, according to Bloomberg Intelligence estimates.

Foxconn started manufacturing the iPhone 14 in India a few months ago – ahead of schedule – after a surprisingly smooth production rollout that reduced the lag between Chinese and Indian production from months to weeks. Apple’s three Taiwanese partners are currently assembling iPhones 11 through 14 in India.

But leaving China, where Apple has built a deep supply chain for nearly two decades, isn’t easy. A Bloomberg Intelligence analysis estimated that it would take around eight years to move just 10% of Apple’s production capacity out of China, where around 98% of the company’s iPhones are made.

India is tracking the production and exports of all smartphone makers that benefit from financial incentives under Modi’s push.

Beyond smartphones, the country is drawing up plans to increase financial incentives for tablet and laptop makers, hoping to entice Apple to manufacture everything locally, from headphones to MacBooks, as well as attract new customers. other brands. The iPhone maker is also expected to open its first retail store in India in 2023, after meeting certain criteria imposed on overseas retailers.


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